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Edited Transcript of INOV.OQ earnings conference call or presentation 3-Feb-21 10:00pm GMT

·52 min read

Q4 2020 Inovalon Holdings Inc Earnings Call Bowie Feb 4, 2021 (Thomson StreetEvents) -- Edited Transcript of Inovalon Holdings Inc earnings conference call or presentation Wednesday, February 3, 2021 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Jonathan R. Boldt Inovalon Holdings, Inc. - CFO * Keith R. Dunleavy Inovalon Holdings, Inc. - Founder, Chairman & CEO * Kim E. Collins Inovalon Holdings, Inc. - SVP of Corporate Marketing & Communications ================================================================================ Conference Call Participants ================================================================================ * Alexander Yearley Draper Truist Securities, Inc., Research Division - MD of Equity Research * Daniel R. Grosslight Citigroup Inc., Research Division - Research Analyst * David Michael Larsen BTIG, LLC, Research Division - MD and Senior Healthcare IT & Digital Health Analyst * Donald Houghton Hooker KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst * Glen Joseph Santangelo Guggenheim Securities, LLC, Research Division - Analyst * Jared Phillip Haase William Blair & Company L.L.C., Research Division - Research Analyst * Jessica Elizabeth Tassan Piper Sandler & Co., Research Division - Research Analyst * Raymond Xu Morgan Stanley, Research Division - Research Associate * Stephanie July Davis SVB Leerink LLC, Research Division - MD & Senior Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, ladies and gentlemen, and welcome to the Inovalon Fourth Quarter 2020 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded. And now I'll turn the conference over to your host Kim Collins. Please begin. -------------------------------------------------------------------------------- Kim E. Collins, Inovalon Holdings, Inc. - SVP of Corporate Marketing & Communications [2] -------------------------------------------------------------------------------- Good afternoon. This is Kim Collins, Senior Vice President of Communications at Inovalon. I'm here today with Dr. Keith Dunleavy, Inovalon's Chief Executive Officer and Chairman of the Board; and Jonathan Boldt, Inovalon's Chief Financial Officer. I'd like to welcome you to our fourth quarter and full year 2020 earnings call. The press release announcing our financial results was distributed this afternoon, and a replay of today's call will be available shortly, posted on the Investor Relations page on Inovalon's website. For those of you listening to the rebroadcast of this call, we remind you that the remarks made herein or as of today, February 3, 2021, and will not be updated subsequent to this initial earnings call. I'll remind you that certain statements made during this call may be characterized as forward-looking under the Private Securities Litigation Reform Act of 1995, including statements related to future results of operations and financial position, our business strategy and plans, market growth and our objectives for future operations. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in the company's earnings release and filings with the SEC. In an effort to provide additional information to investors, this conference call and webcast is accompanied by a presentation, which is available on the IR section of our website. You're encouraged to download a copy of this presentation to follow along with our prepared remarks. Our presentation also includes certain non-GAAP financial measures. You'll find definitions of these non-GAAP measures and reconciliation charts at the end of the company's earnings release and on the company's website. Now it is my pleasure to turn the call over to Dr. Keith Dunleavy. -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [3] -------------------------------------------------------------------------------- Thank you, Kim. Good evening, everyone, and thank you for joining our call. I want to start by thanking all of the dedicated hard-working employees of Inovalon across the country for their unwavering focus and commitment to driving client value and impact throughout 2020, and particularly during the pandemic. The entire organization transitioned seamlessly to a remote work environment and both the capabilities and differentiation of the cloud platform as well as the durability and efficiency of the Inovalon business model is shining through. Turning to our Q4 and full year 2020 results. We entered 2020 with momentum. But then the unexpected arrival of COVID impacted parts of our legacy business and, to a lesser degree, our services business. But demand for our cloud-based platform capabilities was already climbing significantly and COVID only further accentuated awareness and the need for cloud-enabled tools and the benefit of data-driven capabilities. Demand climbed throughout the year with significant new sales. As sales were accelerating, so too have been our implementations. Now after multiple quarters of strong new sales, rising client retention rates and strong renewal rates, the leading edge of the multiple layers of compounding subscription-based growth is coming into view. Our Q4 2020 revenue came in at a record $189.7 million, reflecting 18% sequential revenue growth from Q3 2020. This was at the very high end of our range provided on October 28, 2020. Q4 subscription-based platform revenue was $163.5 million, up 14% year-over-year and 15% sequentially, equating to 86% of Q4's total revenue. As our platform revenue climbs and our market pricing increasingly reflects the value impact being achieved for our clients, growth acceleration is also translating into greater operational leverage and profitability. Our Q4 2020 adjusted EBITDA was a record $68.1 million, reflecting the adjusted EBITDA margins of 35.9%, up 270 basis points year-over-year. And while we are now seeing an acceleration of growth resulting from the combination of preceding quarters contributions, we are also seeing an acceleration in market demand and sales execution, resulting in strong sales with new sales ACV of $93.5 million for the quarter, nearly $18 million higher than the previous record, which was only set 2 quarters earlier, reflecting a 27% year-over-year increase. And I'm pleased to tell you that even with such a large number of sales successfully closed in the fourth quarter, today's pipeline is very strong across all business units, reflecting very positive demand and progressing momentum in 2021. What you're seeing within the fourth quarter's results is the leading edge of growth resulting from the many quarters of successively strong sales, now completing their implementations and incrementally additive layers of new business translating to significant revenue expansion and accelerating profitability while having required time to build the layering of hundreds of meaningful multiyear subscription-based contracts is now driving a long term expansion. Inovalon stands today as a leading vertical provider of cloud-based platforms empowering data-driven health care. You've heard me say before, that we see Inovalon as an enablement layer, an empowering layer, following the intel inside philosophy of being part of everybody's data-driven health care solution. Very similar to how Veeva, Microsoft, Amazon, Snowflake, ServiceNow and Salesforce are the behind the scenes enablement technology providers, empowering their respective customers to succeed so too, is Inovalon's vision to be the enablement layer of data-driven health care. As of the end of 2020, the Inovalon ONE platform connects to, contains and leverages massive amounts of primary sourced identified real-world health care data of more than 332 million patients, more than 1 million clinical providers, more than 574,000 clinical facilities and more than 61 billion medical events, growing at a compounded annual growth rate of more than 46%. Let me take a moment to dive somewhat deeper into our data asset and highlight the data sets informing clinical research, intervention and value impact opportunities critical across much of the U.S. health care ecosystem. On Slide 11 of the supplemental deck we provided along with our release, you can see several clinical cohorts highlighted. As of the end of 2020, our more squared registry data set included more than 18 million oncology patients, more than 55 million diabetes patients and more than 7 million patients with Alzheimer's. These are but a few examples of the areas where Inovalon's data can inform highly valuable impact for our partners within the marketplace and the patients they serve. There is no other company that we're aware of that has these massive data assets in primary source, longitudinal matched and linked patient-specific data. This data is not only a reflection of our strong connectivity and engagement within the U.S. health care ecosystem, but the data is part of our differentiator, empowering data-driven health care and its focus on improving the clinical quality and economics for health care, a capability that translates into billions of dollars of value for our clients. Of note, this also highlights Inovalon's independence, an important aspect as the company works to increasingly become the enablement layer of data-driven health care. Our client base is large and expanding significantly and now totals in the many thousands of clients, including all 25 of the top 25 U.S. health plans, 22 of the top 25 global pharmaceutical companies and 19 of the top 25 U.S. provider systems, set upon a foundation of thousands of subscription-based contracts and accentuated by the layering of many large previously announced sales, strong client retention rates, renewal rates, expanding contract durations and rising membership counts within the existing contracts, we see strong growth in 2021 and beyond with guidance for revenue to grow 11% to 15%, coming in at $741 million to $768 million in 2021, and we see very strong profitability. The efficiency of our cloud-based business model is driving leading SaaS profitability margin expansion as we add increasing sales and resulting subscription-based SaaS contracts, the operating leverage is significant. Incremental revenue is increasingly translating into disproportional profitability. This profitability gives us the flexibility to further accelerate our growth. In 2021, we see further expansion of adjusted EBITDA to a record of $265 million to $275 million, representing a 36% adjusted EBITDA margin, a year-over-year adjusted EBITDA increase of 15% to 19%. An important note, based upon our cost profile coming into the year, we actually would see our adjusted EBITDA margin expanding to approximately 40% in 2021. Given that as we have conveyed, we will be investing an incremental 400 basis points into factors that further accelerate our top line revenue growth. Specifically, we will be investing an incremental 300 basis points into sales and delivery and an incremental 100 basis points into further acceleration of our innovation, go-to-market initiatives, leaving approximately 90 basis points of expanded profitability to fall to the adjusted EBITDA line. As we have been pointing out the multiple factors that are layering into a compounding increase in growth, I'd like to take a few moments to walk through why we are seeing not just accelerating growth here in 2021 but also for many years to come. We believe that this is an important point and included Slide 9 within the supplemental deck to assist the financial community with these contributing factors. Starting at the bottom of the slide as our base or foundation, we have thousands of multiyear, highly sticky relationships within the market with multiyear subscription-based contracts. As these contracts are subscription-based in design, utilizing a monthly PxQ contracting model, patient membership dynamics are strongly in our favor. As you know, those in need of care are increasing in count, patients are living longer and with more chronic conditions. The number of patients within the health care population types that we serve are rising strongly at between a projected 5% and 11% in 2021. As these memberships rise, the Q in our PxQ revenue model increases as well. On top of this, our pricing power in the market is healthy due to the strong value our platform is delivering to our clients. As such, the P in the PxQ equation is also rising. We see this in new contracts and in the auto escalators, which are being added to our contracts, resulting in higher pricing each year. On top of these strengths, within our established book of business, we are seeing strong new sales. As you've seen, they're rising quickly, hitting new records, adding an additional long-term sticky business to layer on top of what is already expanding. And the sales of yesterday ARE undergoing implementation and the resulting business is coming online, translating the sales success of prior quarters into incremental revenue. Moving our way up the compounding curve, we are seeing expanded contract terms. While 3 year durations used to be our standard, we are increasingly seeing 5 year, 6 year, 7 year and even 8 year agreements. Not only does this dynamic of our longer-term contracts add to visibility of compounding growth, but it also allows us to spend more of our time and energy, taking care of the client, delivering value to them and a fantastic customer experience, which also supports the dynamic of a happy and successful client, which we then grow with further together. And in fact, we are seeing that client retention is rising, net renewal rates are strong. At the same time, our always persistent investments in leading the market and technology capabilities continues to translate into expanding data sets, ecosystem connectivity and the number of products we have available for our clients. So, in turn, that our customers can then lead in their respective areas of the health care ecosystem. You have seen us accelerate the pace of bringing new offerings to market, consumer health gateway, data stream API, virtual telehealth and counter support modules, vaccine adherence solutions, infection watch, to name a few released during 2020 alone. What is also happening is that the depth of our data sets and the sophistication of our resulting analytical capabilities is translating into more meaningful differentiation and greater value for our clients, and that, is resulting in more cross-sells and upsells. In the fourth quarter of 2020 alone, 5 of the top 10 U.S. health plans, all of which were already clients of ours, each awarded us new business going into 2021. And in many cases, these awards were rather large, that comes from delivering for your clients, bringing value and beating out alternatives in the marketplace, something which Inovalon is doing very well. And you can see the success in our numbers. In 2020, our existing clients contributed 60.3% of the company's sales driven expansion and new logos represented the other 39.7% of the company's sales driven expansion. Inovalon is succeeding in both expansion of its client base and the task of delivering even more value to our existing client base. And our success with our persistent focus on innovation and client value impact, is not only showing up in our quarter-to-quarter sales but is also increasingly providing us with a coveted longer-term leadership position in the market. You can see by the names we are working with, not just the ones announced, but the ones not announced, which include all 25 of the top 25 health plans, 22 of the 25 global pharmaceutical companies, 19 of the top 25 payer systems and 2 of the global top 10 consumer retail companies, all of which are clients. Inovalon is increasingly at the table when it comes to large-scale strategic decisions of how to empower the data-driven health care strategy of the world's leading companies and the communities they serve. We see all of this as a very strong setup for other great growth expanders as we launch capabilities into the adjacencies of the health care segments that we currently serve and into geographies outside of the U.S. In summary, Inovalon is benefiting from multiple compounding growth tailwinds, which are delivering significant double-digit revenue growth and profitability now in 2021 and for many years ahead. And with that, please allow me to hand the call over to Jonathan Boldt, our CFO, to walk through the financials and guidance in more detail. Jonathan? -------------------------------------------------------------------------------- Jonathan R. Boldt, Inovalon Holdings, Inc. - CFO [4] -------------------------------------------------------------------------------- Thank you, Keith, and good evening, everyone. Building on Keith's opening remarks, I'd like to begin by highlighting a few key points. First, the fourth quarter's financial results reflect accelerated revenue growth which came at the very high end of our guidance range we provided on October 28, 2020, and non-GAAP diluted net income per share that came in above the range we provided at the same time. Second, we are reaffirming our previously announced 2021 full year guidance, which calls for 11% to 15% year-over-year organic revenue growth, 15% to 19% year-over-year adjusted EBITDA growth and increasing our 2021 net cash flow provided by operating activities to $180 million to $195 million. Third, we are also providing first quarter 2021 guidance, which reflects 10% to 14% year-over-year organic revenue growth and 16% to 31% year-over-year adjusted EBITDA growth. Lastly, we are laser-focused on scaling and execution as demand is strong, and our momentum is increasing, making prudent investments designed to even further accelerate the strong revenue growth and continued profitability we are seeing in 2021 and beyond. Now turning to our fourth quarter results in more detail. Fourth quarter 2020 revenue was a record $189.7 million, an organic increase of 18% sequentially and 9% year-over-year. Subscription-based platform revenue was $163.5 million, reflecting 15% growth sequentially and 14% growth year-over-year, equating to 86% of fourth quarter total revenue. Services represented 12% for the fourth quarter in 2020, with legacy reflecting the remaining 2% as expected. New sales ACV during the quarter was very strong, coming in at a record at $93.5 million, an increase of 27% year-over-year. Fourth quarter 2020 new platform sales ACV, excluding services, was $68.2 million or an increase of 30% year-over-year. Turning to gross margin. Fourth quarter 2020 gross margin was a solid 73.4%, an increase of 20 basis points year-over-year. Full year gross margins came in at 74.9%, an increase of 100 basis points year-over-year. Fourth quarter adjusted EBITDA increased 18% year-over-year to a record $68.1 million, representing an adjusted EBITDA margin of 36%. Full year adjusted EBITDA was $230.9 million, an increase of 10% year-over-year, with the adjusted EBITDA margin coming in at 35%. Our industry-leading SaaS margins continue to be driven by our increasing pricing power in the market, a positive shift in our revenue mix to our subscription-based offerings and leveraging our investments in connectivity, automation and the increasingly efficient cloud-based software and compute architectures. Fourth quarter 2020 non-GAAP net income per share was $0.21, which is an increase of $0.06 per share or 40% from the year ago period. Full year 2020 non-GAAP net income per share was $0.62, an increase of 19% compared to the $0.52 during the full year of 2019. Turning to cash flow. Net cash provided by operating activities in the fourth quarter of 2020 was $37.3 million, which is net of or after the payment of $12.8 million in interest payments, and $146.4 million for the full year of 2020, which is also net of or after the payment of $52.5 million in interest expense payments. Full year 2020 cash flow from operations was impacted by the timing of certain working capital investment decisions and accounts receivable collections, which are expected to occur in the early part of 2021. Accordingly, the company increased its 2021 cash flow from operations guidance by $20 million to reflect the impact of these expected timing items. Fourth quarter CapEx was $15.3 million, and for the full year was $66.7 million as the company continued to invest in platform expansion and multiple large client implementations. Pulling this together, Inovalon generated $79.6 million in positive free cash flow in 2020, an increase of $32.1 million or 68% as compared to $47.5 million of free cash flow for 2019. Inovalon's strong cash flow generation capability continues to highlight the scale and the profitability of our business model. Moving to the balance sheet, Inovalon's financial position remains strong. Inovalon's cash and cash equivalent as of December 31, 2020, was $123.9 million. The reported balance sheet debt was $887.4 million net of issuance discounts and deferred financing fees, and our net debt position was $784.1 million. The company's net debt leverage ratio, as defined within our debt agreement, improvement continued to 3.37:1 as of Q4 2020, as compared to 3.55:1 as of the end of the third quarter of 2020 and down from 3.83:1 from a year ago. As a result of our improved leverage ratio being below 3.45:1, our interest payment rate will automatically reduce by 25 basis points, which will become effective in Q1 of 2021, resulting in approximately a $2 million annual cash interest expense savings. Now let me conclude by sharing updates to our 2021 financial outlook. For the full year 2021, we are reaffirming our prior guidance ranges for revenue, adjusted EBITDA, GAAP and non-GAAP net income and net income per share and capital expenditures. And we are increasing the guidance on net cash provided by operating activities. As such, each of these metrics will see strong growth in 2021. Total revenue will grow by 11% to 15%. Net income will grow by 90% to 108%. Non-GAAP net income will grow 19% to 22%. Adjusted EBITDA will grow 15% to 19%. Net cash provided by operating activities will grow 23% to 33%. Diluted net income will grow by 87% to 107%. And non-GAAP diluted net income will grow by 18% to 21%. For the first quarter of 2021, we are providing guidance of revenue to be between $170 million to $176 million, reflecting year-over-year organic growth of 10% to 14%. Note that on a sequential revenue basis, our guidance is consistent with the usual seasonality over the last several years in our business from Q4 to Q1. Adjusted EBITDA is expected to come in at $55 million to $62 million, reflecting a year-over-year increase of 16% to 31%. And non-GAAP diluted net income per share of $0.14 to $0.17, reflecting a year-over-year increase of 27% to 55%. We encourage you to refer to today's earnings release and our fourth quarter supplemental earnings deck for more details on our 2021 guidance ranges. Before going to Q&A, I will close by echoing Keith's comments. The fourth quarter of 2020 demonstrated the market's strong demand for the Inovalon ONE platform, record new sales and the leading edge of revenue acceleration resulting from previously announced sales turning into layered long-term revenue growth and continued profitability expansion. We are excited for 2021 and the growth we have already conveyed with strong client renewals and retention rates expanding contract durations now with 5, 6, 7 and 8-year contracts and strong marketplace dynamics, we are not only pleased with the accelerating growth we are seeing in 2021 but also in the strength of growth for many years beyond. With that, let me turn the call back over to the operator to conduct our Q&A session. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question comes from the line of Glen Santangelo with Guggenheim Securities. -------------------------------------------------------------------------------- Glen Joseph Santangelo, Guggenheim Securities, LLC, Research Division - Analyst [2] -------------------------------------------------------------------------------- Congratulations on the results. Keith, I wanted to dive into the ACV that you reported this quarter. I mean that's obviously a big number. I was hoping maybe you could unpack that a bit and maybe give us a better sense for which segments of your business are seeing the biggest uptick in demand? And then maybe as a follow-up to that, when I look at the full year, your ACV was up 24%, equally a good number. Maybe could you remind us or give us any color for how that ACV should flow into the reported revenues as we think about modeling out the cadence for the full year. -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [3] -------------------------------------------------------------------------------- Glen, good evening. Thanks for joining the call, and thanks for the question. So certainly, quarter-to-quarter versus the full year is a slightly different answer. And part of that, you can gain insight from the typical amount of time it takes to close the different types of contracts, right? So in the fourth quarter specifically, we had very nice performance in all of the business units. Certainly, a very impressive performance from the -- both the payer group just crushed it during the quarter and had a strong amount of expansion of sales. As we mentioned, 5 of the top 10 payers, all of whom were already customers of ours gave us additional business for 2021. And then additionally, we saw a very strong performance from the life sciences marketplace as well, which was north of 25% year-over-year, just an outstanding performance from that group. And then coming -- an important point, Glen, is coming into the 2021, we're seeing significant continued strength across all the business units as well. So now how do you translate that? How do you help translate that into how things play out during the year? As you know, some of that starts to implement very quickly, and some of that takes much longer to implement. Typically, your life sciences work and your provider work start to implement much more quickly than the payer and pharmacy lines of business. So we're going to see that same dynamic play out here from things that were signed in the fourth quarter. Some of it taking a while, some taking a long while to implement, but we're well into the cycle now of accelerating sales on top of sales. And you saw that in the fourth quarter realized revenue expansion. So that leading edge has already come. It's hitting. We now have many large contracts implementing. It's not a smooth line, as you've seen, because of the nature of some of them. But the -- not only was the strength in Q4 impressive -- even inside, we are quite excited about it. But the quality of those sales was impressive as well, meaning the names that we're signing, the quality of the contracts, meaning the durations of those contracts, how many years they are going out and how they are building on a fair amount of synergy with products they already have in place. A number we gave out on today's prepared remarks was how much of our sales growth is coming from existing clients versus new clients. We saw that at about 60-40. It was a little over 60, I think 60.3% or 60.7% versus 39.7%. So we're seeing very good health also in existing customers saying, we want more and new clients coming on board. I hope that addresses your question, Glen. -------------------------------------------------------------------------------- Operator [4] -------------------------------------------------------------------------------- And our next question comes from the line of Ricky Goldwasser with Morgan Stanley. -------------------------------------------------------------------------------- Raymond Xu, Morgan Stanley, Research Division - Research Associate [5] -------------------------------------------------------------------------------- This is actually Raymond on for Ricky. Congrats on the quarter. And I wanted to start off with one, on the 2021 growth. So as we look at the various verticals, the payer, the provider, pharmacy and life sciences, we see that the majority of the growth in 2020 came from the pharmacy and life sciences. Just wondering, as we look forward to 2021, will that continue to be the case or will the growth be more balanced? And would you be able to rank order those for us? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [6] -------------------------------------------------------------------------------- Raymond, thanks for being on the call. As you might remember, going back to the beginning of 2020, even before COVID came on, we rank ordered them, and we said pharmacy would be #1, life sciences would be #2, payer #3 and provider #4. And that's how it played out. I will tell you now, it's an aggressive horse race going on here at Inovalon. I will tell you that it's a little harder to call because we're seeing so much growth from the leaders of payer, pharmacy and life sciences. Providers also doing very well, accelerating here. It was accelerating in the fourth quarter. And we're seeing an accelerate here now. So there are no laggards, but it's going to be a neck and neck race. And we enjoy that neck and neck race, but all 3 payer, life sciences and pharmacy are seeing really strong years ahead of them. -------------------------------------------------------------------------------- Raymond Xu, Morgan Stanley, Research Division - Research Associate [7] -------------------------------------------------------------------------------- Great. And if I may follow-up on that. A question on your sales force. So I understand that you're reinvesting some of the operating leverage into expanding your sales reps. Could you just share how you think about where you're adding new reps? Are you hiring for specific verticals or covering specific geographies? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [8] -------------------------------------------------------------------------------- Yes, sure, Raymond. So coming into the year, as you look back on 2020, we're directionally 11%, 12% or so on sales and marketing. We're going to put another roughly 300 basis points in sales and delivery in 2021. So that's increasing that group by directionally 20%, 25% or so. We're -- we've launched a number of new products. We have been penetrating further and further down into our customers. We're starting to align individual people with some of these larger clients and embedding them inside. We're getting a stronger and stronger client focus in our client success strategy and total client experience, as Jacques refers to it. And that is really hand-in-hand or arm-in-arm with the business development efforts. So you're seeing it in greater density of coverage in the marketplace, as well as expanding into new product offerings and supporting those in the market. -------------------------------------------------------------------------------- Operator [9] -------------------------------------------------------------------------------- And our next question comes from the line of Sean Wieland with Piper Sandler. -------------------------------------------------------------------------------- Jessica Elizabeth Tassan, Piper Sandler & Co., Research Division - Research Analyst [10] -------------------------------------------------------------------------------- It's actually Jess on for Sean. Congrats on the quarter. I think our first question is just around some of the incremental payer wins reported in the quarter. Can you just describe maybe what some of the products were that drove those wins? Or what that decision-making process was like to convert those new customers? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [11] -------------------------------------------------------------------------------- Jessica, thanks for being on the call. So as we mentioned in our prepared remarks, we had 5 of the top 10 and obviously quite a few outside the top 10 payers sign new and expanding business with us for 2021. We're really seeing it in multiple different areas. We've been selling the consumer health gateway in response to the interoperable rules that have come out. We've been seeing nice traction in our data stream API work as well. You saw Walgreens announcement of that but there's also a fair amount of attention on that on the payer side. And we're seeing a lot of interest on the decision support and analytically driven encounters. This is something I know you and Sean know a bit about. ePASS was super strong during the quarter, and we're seeing multiple national expansions that in Blue Cross Blue Shield organizations as well as your national brands. -------------------------------------------------------------------------------- Jessica Elizabeth Tassan, Piper Sandler & Co., Research Division - Research Analyst [12] -------------------------------------------------------------------------------- Okay. And then if I could just follow-up with -- as we go through some of the Qs this year, we noticed just revenue from existing customers was down 1.7, 18.5, 25.7, I think, Q1, Q2, Q3. Can you just help us understand what drove maybe some of that churn? What drove some of that churn? And then how should we think about retention going forward? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [13] -------------------------------------------------------------------------------- Yes, Jessica, another great question. It's really tough to interpret that out of context. We appreciate the challenge that you have in trying to interpret that. That is predominantly due to 2 things, predominantly legacy business, right? So when the legacy business winds down with somebody, you see it as churning out even when a client is turning on a new platform offering. So if somebody shuts down legacy, you see it as a loss and as they sign on to a new cloud-based platform, it might have to implement for some time yet. And then also, there's a fair amount of M&A that goes on in the marketplace that ends one contract, whereas another client of ours gets larger, but it doesn't even show up in our sales. So there's a fair amount of M&A going on in the marketplace. We keep those contracts but they get absorbed into the acquiring company or they're getting absorbed, they decide where the contract lives. But because their PxQ are membership based, the membership typically expands in those situations, but it doesn't show up as a sale because it did not require a new signature to put that contract into place. So when you're trying to read those on the face of them as is defined in our filings, we understand what you're doing, but it is taking them a bit out of context, we're seeing strong growth across the base. -------------------------------------------------------------------------------- Operator [14] -------------------------------------------------------------------------------- And our next question comes from the line of Stephanie Davis with SVB Leerink. -------------------------------------------------------------------------------- Stephanie July Davis, SVB Leerink LLC, Research Division - MD & Senior Research Analyst [15] -------------------------------------------------------------------------------- Congrats again on the quarter. So Keith, I was actually hoping to direct my first question to Jason. Is he on the line? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [16] -------------------------------------------------------------------------------- He actually was -- he is listening on the line, but he's not joining us on the line. He is out sick right now. I apologize. I'm sure he would send his regards. So we do apologize. -------------------------------------------------------------------------------- Stephanie July Davis, SVB Leerink LLC, Research Division - MD & Senior Research Analyst [17] -------------------------------------------------------------------------------- No worries at all. (inaudible). -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [18] -------------------------------------------------------------------------------- He did an awesome job in Q4, if I don't say so myself. -------------------------------------------------------------------------------- Stephanie July Davis, SVB Leerink LLC, Research Division - MD & Senior Research Analyst [19] -------------------------------------------------------------------------------- Agreed, agreed, agreed. Well, my first question was really around the uptick in new win announcements coming out, you guys recently. I just want to hear, and maybe your perspective would be interesting. What has changed in the past year or 2 to create this acceleration in deal base that we've been seeing? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [20] -------------------------------------------------------------------------------- Well, thanks, Stephanie. I think the way -- what Jason would say, and I think Jacques and others would join him, it's all about value creation for the customer. We've put a lot of focus on putting the customer first. I mean that's a tagline that a lot of people say, but the total client experience is really a focus of ours. It's in our modularity of our software design. It's in our desire to work with the clients to their benefit. And really focusing on how they achieve value from the software and the data and everything else. When our clients have looked around, especially during COVID, they have found that the value delivered by the Inovalon ONE platform is very significant and very measurable that is leading to us pulling ahead of other alternatives in the marketplace. So we keep on innovating. We keep on driving new products and expanding capabilities in the marketplace. And we're doing it based upon customer feedback of what they need and want and then delivering very strongly on it. A lot of other tech players in the marketplace had trouble with their platform over the last 11 months, and ours remained extremely resilient and reliable. All that coming together is driving a lot of new client wins. -------------------------------------------------------------------------------- Stephanie July Davis, SVB Leerink LLC, Research Division - MD & Senior Research Analyst [21] -------------------------------------------------------------------------------- So continuing on that new client win thread, I have a question you're probably not going to love. But I was hoping to get an update on your Walmart relationship. You've had a recent win there. There was an article out that Walmart working on a health care data, AI project. Are there any lines to be drawn between some of these data points? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [22] -------------------------------------------------------------------------------- Stephanie, it's a great question. We very much enjoy Walmart as a client. We're ecstatic to have them. They are fantastic people. We have a lot of things going on with them. We really can't comment on it outside of what is in the public domain. But we are very honored and pleased to be working with them, and we'll just have to leave it at that. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- And our next question comes from the line of Ryan Daniels with William Blair. -------------------------------------------------------------------------------- Jared Phillip Haase, William Blair & Company L.L.C., Research Division - Research Analyst [24] -------------------------------------------------------------------------------- This is Jared Haasen in for Ryan. Keith, I think you mentioned internally would expect EBITDA margins in the 40% or so range in 2020, where you're kind of taking that opportunity to fund some reinvestment in the company. And so just thinking about operating leverage sort of on a go-forward basis. Once we kind of get past the COVID environment and everything, should we think about sort of that level of margin expansion being fair to expect? Or if not, should we think about it maybe continuing to expand at sort of the 100 basis points or so that's implied by the guidance here? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [25] -------------------------------------------------------------------------------- Jared, thanks for the question. Thanks for being on the call. Look, we're seeing a ton of profitability flexibility. I think it's a term we started using a fair amount over the last 18 months. As the operating leverage of the business model and the platform just continues to shine through, we want to make sure we focus on the right things, which is obviously, the long-term success of the company, the long-term success of our customers. So we're going to be investing those dollars and continuing to lead in innovation and bring new products and larger solutions to the marketplace. We wanted to make sure we gave good visibility into just how much flexibility we have in this profitability. It's on Slide 8 of the supplemental deck, where you see how our gross margins have been evolving over multiple years and our EBITDA the same, but then really showing you the operating leverage that we're experiencing. So as you try to think of that in your models going forward, we're saying 36% here for 2021. I think that's the right place to be thinking of it as we want to pump more and more into topline acceleration. So we're excited to show you more top line acceleration and hold EBITDA here in and around 36%. And as the company gets into a more appreciated view of its SaaS contribution to margins, we'll start thinking about how to address that bottom line again. But for right now, we want to pump it into further acceleration of our top line. -------------------------------------------------------------------------------- Jared Phillip Haase, William Blair & Company L.L.C., Research Division - Research Analyst [26] -------------------------------------------------------------------------------- Okay. Great. Yes, that's helpful color. And then maybe just sticking with a similar theme as a quick follow-up, just around reinvestment. So obviously, you guys talked a lot about just continued strong ACV and that's continuing to layer into the platform. Keith, I know you mentioned a couple of different sort of buckets of areas where you expect to use that EBITDA margin to reinvest in the company so this may kind of fall into those buckets. But I'm sort of thinking about implementation, the workflows and sort of the product support teams that you have in place. Is that an area where you kind of have the team that you need to be able to implement all this ACV that you've sold recently? Or is that kind of a part of that reinvestment strategy that you've outlined? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [27] -------------------------------------------------------------------------------- Well, certainly scaling those teams is important to us. The 300 portion of the 400 incremental reinvestment, we refer to that as sales and delivery. So there is some implementation component in there. As has been pretty impressive, we were reflecting on this in the recent days, how much implementation occurred in a completely -- not even getting together with our customers in the last several quarters. So we have massive implementations that have been brought online or soon to come online that we've done completely remotely, which is one of the huge benefits of cloud technologies. So our costs there are really efficient and are getting more and more efficient as we focus on automation of those implementations. And as the software continues to mature further and further, Geoff Charron, our Head of Technology, this guy is really impressive in how he drives to greater and greater efficiency of the implementation cycles of the software. So yes, we are putting more money into it, but we don't have to do it as proportionally as you might think as we implement more and more. -------------------------------------------------------------------------------- Operator [28] -------------------------------------------------------------------------------- And our next question comes from the line of Donald Hooker with KeyBanc. -------------------------------------------------------------------------------- Donald Houghton Hooker, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [29] -------------------------------------------------------------------------------- You guys mentioned, I just wanted to hear a little bit more about sort of the momentum, the growth you're seeing in the life sciences space. Maybe can you share with us some of the use cases there? You guys seem to be doing a lot of stuff there. Can you just walk through some of the use cases where you're getting the most traction? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [30] -------------------------------------------------------------------------------- Don, thanks for being on the call, thanks for the question. Life Sciences Group is just doing really fantastically. And as we've been saying for some time, there is this blurring that's occurring between the different verticals and adjacencies in the marketplace. One area of significant attention has been vaccines and vaccine adherence. We don't need to tell anybody around the world right now that vaccines are important. We supported in the fourth quarter both of the U.S. vaccine programs. And we obviously launched the vaccine adherence platform during the fourth quarter. That has received strong uptake that is with additional pharmaceutical companies beyond the 2 leading vaccine manufacturers here in the U.S. for COVID, at least that is. So we're seeing it in many areas. And life sciences has roared back into, gosh, far more than a weakness. I don't know the right term to put on it, but I think they've seen a great vertical awakening in the COVID year, and they're certainly moving on that, and we're delighted to help us support them in how they roll things out. -------------------------------------------------------------------------------- Donald Houghton Hooker, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [31] -------------------------------------------------------------------------------- Okay. That's interesting. And then I guess my follow-up would be, in terms of you reported, I guess, total ACV growth here looks like 27% in the fourth quarter, I think if I have my numbers here right, juggling various numbers here. Have you guys thought about sharing kind of a total contract value growth as you keep alluding to contract durations extending, just kind of curious how much if you can kind of directionally point that way? Or is that a metric you might be willing to share in the future? How are you thinking about helping us think through that because it seems like that's something that's changing for you guys? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [32] -------------------------------------------------------------------------------- Yes, Don, it's a great question. And we obviously always want to hear what you and others in the marketplace think might be helpful. Because we have so many new offerings coming to market, so many different types of clients and many different durations, we ask ourselves how much additional help that would provide versus not help. We're delighted that the average duration of our contracts continue to get longer, which then lends the benefits that I talked about in the prepared remarks, it's really twofold. A, the longer those term contracts are the greater visibility we have in longer-term growth. But then we've also found that that helps us focus on the clients' needs, and we do more cross-selling and upselling for them. And then also in the long-term nature of these contracts, we're seeing clients really why are they making their contracts longer and longer with us. A, what I'd encourage you to interpret that as is they're getting more and more comfortable that we're the technology they're going to want for the long term, right? In a marketplace where competition is running rampant, customers get worried that they should only sign for a short period of time because something better could come along next year or the year after, or they could drive down a lower price if they went through a shorter renewal cycle. We're seeing the opposite happen. We're seeing our clients want longer contracts because they don't want to have to go through a repricing of it because it might be in a direction they don't want. And because they're making decisions to base their more strategic longer-term decisions. And when you implement a cloud platform and build other things on it, we become an important partner of theirs in their success, which we take very seriously. So these contracts not only being long term, but they're also getting, as we referred to in the prepared remarks, auto escalators built into them that are predictable for the customer and also obviously positive for our PxQ pricing models going forward. So although we can't give you total contract value help, we are seeing strong directions, as I just conveyed, that I hope you would agree, are quite positive for the company. -------------------------------------------------------------------------------- Operator [33] -------------------------------------------------------------------------------- Our next question comes from the line of David Larsen with BTIG. -------------------------------------------------------------------------------- David Michael Larsen, BTIG, LLC, Research Division - MD and Senior Healthcare IT & Digital Health Analyst [34] -------------------------------------------------------------------------------- Congratulations on a good quarter. Can you maybe just talk a little bit about the impact of COVID? Is Inovalon fully passed COVID in your view? And how is that impacting like your different segments? So for example, on the provider side, how are hospital volumes? Is that impacting your provider business? Is that dependent on the number of services being delivered at the doc office and in the hospital? And then also on the plan side, I think there was some slowdown in campaigns in 3Q of '20. Are you fully -- are they fully past COVID? And just any general thoughts there would be very helpful. -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [35] -------------------------------------------------------------------------------- Sure, David. Thanks for the question. So I don't think anybody in the United States can say they're passed COVID. But I think very importantly for us, I think we've very much built it into our model and our expectations. And we saw that the fourth quarter play out as we expected with about 2% legacy revenue contribution during the quarter. So to walk quickly through your various different points. In the provider space, we've certainly seen a return of indications of activity to the provider space. But vastly, those revenues for us are subscription-based and stayed intact through COVID because they're licenses that are monthly and subscription, regardless of whether or not the -- in a position we're seeing patients or whatnot. But we can tell through those platforms, unrelated to the revenue impact to us, yes, they have really started reaccelerating, and that's been going on for some time. It's also helpful to our sales velocity there because the doctors do need to be there to make a purchase decision. So we're seeing, as I mentioned, nice pickup in sales there as well. When we go to the payer space, as you mentioned, you're indeed correct that in the payer space, some initiatives, some campaigns directed by payers, but only on the legacy side of things were impacted in the mid part of the year last year. We then built it into our expectations, built it into our modeling, and we're able to correct for that as we were gaining our main acceleration of growth off of subscription-based platform and not the legacy business. So as you can see going forward here in 2021, we have left the legacy piece as really a low contributor to the year. We do expect COVID to continue pretty intensely here in the first part of 2021 and starting to lighten up in the second half of the year but we have kept our expectations of the things that can be impacted by that to a very low expectation to offset that. So we think we're taking a pretty conservative view on that. Nothing to be learned by the second kick of the mule on that topic. Does that answer your question? -------------------------------------------------------------------------------- David Michael Larsen, BTIG, LLC, Research Division - MD and Senior Healthcare IT & Digital Health Analyst [36] -------------------------------------------------------------------------------- Yes, that's very helpful. And then just one more, if I can squeeze it in. I think you mentioned in the prepared remarks, you won business with 2 of the top 10 retail systems. Which ones were those? Was that Walmart and also Walgreens? And what sort of in-sell are longer-term growth potential do you see on the retail side of things? Is it really specialty pharma related? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [37] -------------------------------------------------------------------------------- Sure, David. So you are correct, those are the 2 that we've announced, 2 of the top 10 global retailers, both really great relationships. Unfortunately, we can't comment more on those decides to say we -- they're fantastic relationships. We're very active with both of them. And they both have very significant aspirations on how they want to play in the health care space. We'll have to leave anything else to whatever they may -- whatever may happen in the future. I apologize we can't dive into more of that, Dave. -------------------------------------------------------------------------------- David Michael Larsen, BTIG, LLC, Research Division - MD and Senior Healthcare IT & Digital Health Analyst [38] -------------------------------------------------------------------------------- No problem. Congrats on a good quarter. -------------------------------------------------------------------------------- Operator [39] -------------------------------------------------------------------------------- Our next question comes from the line of Daniel Grosslight with Citi. -------------------------------------------------------------------------------- Daniel R. Grosslight, Citigroup Inc., Research Division - Research Analyst [40] -------------------------------------------------------------------------------- I will add my echo of congrats on the continued momentum here. I just want to talk a little bit about the competitive dynamic that you see playing out over the next few years. There's obviously been a lot of consolidation in the HCIT space recently. And one of your semi competitors being acquired by a large health plan. So I just want you to give us a little bit of an idea of how you're thinking about the competitive dynamic over the next few years? And if we could potentially see some more in-sourcing from the payer side? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [41] -------------------------------------------------------------------------------- Thanks, Daniel, for being on the call. I appreciate it. Look, this is an important area, and I think it's really great to bring it up. I want to emphasize that we have received significant business over the last 12 months from the marketplace in longer and longer-term contracts. So as Jason Capitel would say, they're really answering your question with their wallets, right? They're signing longer and longer contracts with us. As I mentioned in the previous answer to a question, if the marketplace was seeing significant competitive advantage to remain flexible and go to alternatives from us, they'd be signing shorter and shorter contracts, not longer and longer ones. Look, we have to wake up early in the morning and go to bed late at night to earn our wings, but we're delivering significant differentiated value in the marketplace. And a lot of it has to do with our independence, right? So you mentioned an acquisition in your question. We respect those companies very much. Obviously, all 25 of the top 25 health plans are meaningful clients of ours. So we respect and appreciate all of them. But we've been doing very well in competitive bids in the marketplace against the change over the last 12-plus months. And the independence of our solution is an added advantage for us in the marketplace. So we see this as a win for us. We are seeing it as voted as a win for us from our customers in recent weeks. And we will continue to invest in innovation. But there's not another cloud-based solution in the marketplace that has the connectivity and data assets and capabilities that Inovalon does. And that's what our clients are telling us. That's what the major retailers are telling us. And we're very pleased with that, and we'll continue to march under those directions from our customers. -------------------------------------------------------------------------------- Daniel R. Grosslight, Citigroup Inc., Research Division - Research Analyst [42] -------------------------------------------------------------------------------- Yes. Makes sense. Okay. And I guess a follow-up there unrelated to. I just want to try to understand the economic model behind the vaccine tools a little bit better. As we see a rollout of vaccinations this year, should we expect an acceleration of life science revenues for you guys? And then once we get past this bolus, should we see a deceleration in 2022 and beyond, specifically related to the vaccine capabilities? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [43] -------------------------------------------------------------------------------- Yes. So great question. So first of all, we're -- the platform is not being -- the interest isn't just COVID, it's other vaccines. It's -- we have some numbers on that in the release. I can't remember them off the top of my head. But when we released the vaccine adherence platform in November, December, we cited some industry numbers in there. It's a huge, huge opportunity for the manufacturers of the vaccines and the payers who incur the expense of a patient isn't vaccinated and comes down with the condition. And then obviously, the patients themselves, if they're not vaccinated. So this is a win-win-win offering. And as a result, it's a pretty complex offering. The way the structure is set up, both on a technology basis and on a customer contracting and third-party contracting that we go through to involve vaccine manufacturers and health plans and facilities to coordinate all of that is, well, it's an impressive feat that our team has done just a tremendous job with, and it's attracting quite a bit of interest and obviously, revenue. So yes, we do expect this to pick up here in 2021. And do we expect it to go down after that? We don't. It's too early to call the curve of that uptake as we just launched it, but broadly, it's increasingly looking like vaccine appreciation or visibility as an important topic and certainly benefiting from COVID in the other side of the coin way. And I don't see anybody seeing that go away in the coming years. So again, not making any revenue projections on a singular product but a lot of very positive momentum in sales, and we expect that to continue. -------------------------------------------------------------------------------- Operator [44] -------------------------------------------------------------------------------- Our next question comes from the line of Sandy Draper with Truist Securities. -------------------------------------------------------------------------------- Alexander Yearley Draper, Truist Securities, Inc., Research Division - MD of Equity Research [45] -------------------------------------------------------------------------------- Also just pile on on the congrats. Very nice quarter and strong into what was obviously a challenging year for everybody. A lot of the questions have been answered. But maybe just a little bit of a fine point on sort of the trajectory and always appreciate the fact that you guys get sort of the ranges for the quarters. The way it seems to me, if I think about this I want to sort of verify, you would expect subscription platform revenue to decline sequentially, and that's a seasonal and a build from there. The legacy revenue, if I heard you correctly, Keith, you're pretty much assuming, when I think about sort of the range you did in second and third and fourth quarter, staying at those types of levels without a lot of growth and then service is to probably have a similar trajectory because typically, you have a stronger fourth quarter and you had a good one, steps down and then sort of rebuilds at a similar level. Are those sort of ways of thinking about the 3 different revenue line items in the right direction? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [46] -------------------------------------------------------------------------------- Sandy, thanks for the question. So look, you're very familiar with how we run things here. And probably the best way to think about Q1 is the year-over-year issues, right? So there is seasonality, as you just described. They offered different reasons in the different pieces of the business. But altogether, you are thinking about it the right way. But on a numerical basis, we would encourage you to think of it as a year-over-year. Now that we're more than 3 years into the platform really being the larger piece of our story, there's some good reliability and looking at what the sequential dynamic is. And why the year-over-year way to think about it is the right way to think about it. Obviously, as we come out with Q1, we'll give more granular detail into the pieces of it. But as you're trying to think forward for the quarter, look at it as a year-over-year growth model. -------------------------------------------------------------------------------- Alexander Yearley Draper, Truist Securities, Inc., Research Division - MD of Equity Research [47] -------------------------------------------------------------------------------- Got it. Okay. That's helpful. And then a follow-up just on a bigger picture. On -- I think you said Slide 9 where you talked about the strong long-term underlying membership great dynamics. Is that factoring in any specific changes coming out of D.C. with the Biden administration? Or do you think some of the -- I mean, it's obviously very preliminary, but some of the stuff that they're doing to try to get more people back into, enrolled in Obamacare and some other maybe Medicaid expansion? Are those things factored into that 5% to 10% type growth? Or are those things that could be bigger drivers maybe next year and beyond? -------------------------------------------------------------------------------- Keith R. Dunleavy, Inovalon Holdings, Inc. - Founder, Chairman & CEO [48] -------------------------------------------------------------------------------- Yes. Sandy, great question. So when we put out our guidance, remember, last year, we were not trying to call the presidential election. If you might remember, we said we saw the election as either neutral to our positive view in a Trump election and positive to our already positive view in a Biden election. We, in fact, got a Biden administration, so there is certainly an incremental positive to the company in a Biden administration. The 5% to 10% or 5% to 11%, those factors have already really transpired, right? So the Medicaid enrollment is up, managed Medicaid enrollment is up across the country. It obviously differs state by state, but it's directionally -- it's very strong on a historical basis, but it's directionally 5% to 8% around the country. Medicare has again brought in another strong performance that I believe, there are different ways of counting come up with a slightly different number. But it's around 10% to 11% on Medicare Advantage. And then ACA put in a strong performance year-over-year on all parts already reported. And then as you just accurately reflected, Biden has already done an executive order to reopen open enrollment for ACA. Obviously, that's not in our numbers because it hasn't happened yet. We don't know what the performance of that incremental open enrollment will be. So yes, broadly, a Biden administration is incrementally positive to our business model. And really, some of it is very straightforward as just linear math because of the PxQ aspect of it and then some of it is also going to be driving additional new interest with customers for new product offerings. Thank you, Sandy. So thank you, operator. With that, as the final question. And before we close the call, I just want to leave all of our listeners with a few salient points. Number one, we're seeing strong accelerating market demand for our cloud-based capabilities. We're seeing a strong driving of repeat quarters of significant new record sales. Number two, at the same time, we're seeing very strong operating leverage that's resulting in acceleration of our industry-leading SaaS profitability margins. And number three, these factors, which are combining with increased client value recognition, rising client renewals, increasing retention rates and implementations for many, many long-term contracts that are now coming online, have us quite excited for the growth in 2021, but also really importantly, for many years ahead. So with that, thank you all for taking some time out this evening. Thank you for your interest in Inovalon, and good night to all of you. Take care. -------------------------------------------------------------------------------- Operator [49] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.